Construction sector builds momentum

The recovery in the construction industry strengthened in February as activity surged to an eight-month high, boosting hopes that the UK's economy will return to growth.









The latest Markit/CIPS Purchasing Managers' Index (PMI) survey for the construction sector - where a reading above 50 indicates growth - rose to 56.5 in February from 53.7 in January, as it continued to bounce back from the disruption caused by the snow in December.



There was a marked increase in housebuilding activity, which declined in the final four months of 2010, while civil engineering work grew at its fastest pace for three years and levels of commercial building work remained strong.



But the recovery in the construction sector is fragile and could be derailed by prices, which rose at their fastest rate since 2008, Government cuts and low levels of bank lending.



Some 53% of businesses said their costs increased since January, with prices of oil, fuel and steel showing particularly steep rises. Today's report echoes findings from the manufacturing sector where prices increased at near-record levels in February.



Levels of optimism about the future were weaker than January and the number of people employed continued to fall, the survey added.



CIPS chief executive David Noble said: "A weather-beaten UK construction sector is showing signs of repair, with stronger rates of activity and a rise in new business continuing the reversal of fortune since the end of 2010.



"The situation is still fragile considering the likely impact of Government cuts. Concern about the level of bank lending is also having a negative impact on confidence."



The figures suggest that the construction sector, which declined by 2.5% in the final quarter of 2010 and contributed to a 0.6% fall in GDP, should return to growth in the first quarter of 2011, said Sarah Ledger, report author and economist at Markit.







Howard Archer, chief economist at IHS Global Insight, said rising prices will put further pressure on the Bank of England to raise interest rates from their record low of 0.5%.



Construction was a significant driver of the UK's economic growth in the second and third quarters of 2010 but the difficulties now facing the sector mean it will not make a big contribution to the UK's economic growth for much of 2011, he added.



He said: "The construction sector does face a challenging environment and it is notable that sentiment in the sector slipped in February.



"Public spending cuts, still-tight credit conditions and a subdued housing market are particular problems for the construction sector. In addition, soaring input prices are squeezing construction companies' margins."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high